Ocwen building business to securitize new mortgages
Ocwen Financial Corp. (OCN) and its former financial services subsidiary Altisource are creating a new entity to securitize mortgages originated by Lenders One. Ocwen disclosed the new operation, to be known as Correspondent One, in its second quarter financial filing. During the period, Ocwen earnings grew as recent acquisitions of Litton Loan Servicing and HomEq kept it on track to become the nation's largest subprime mortgage servicer. But the firm disclosed to investors that it is pursuing even more business by acquiring existing servicing portfolios, platforms and special servicing opportunities. Ocwen said it is also looking to find access to "a flow of newly originated business." So, in March 2011, Ocwen and Altisource each acquired a 50% equity interest in Correspondent One, which would securitize newly originated Lenders One loans. Lenders One is a network of mortgage banks and correspondent lenders. According to Ocwen, Lenders One originated 6% of all mortgages in the U.S. last year. Ocwen said the venture would allow it compete for the servicing rights to newly originated Federal Housing Administration loans. Even more business could be on the way for the quickly forming servicing giant. Should proposed changes to the servicing fee structure for Fannie Mae and Freddie Mac become adopted, it could push more government-sponsored enterprise loans into Ocwen's reach. It also disclosed still forming plans to service new segments of the industry such as reverse mortgages and home equity lines of credit. Ocwen, which uses many overseas employees, said it plans "to deploy a full on-shore servicing alternative" for potential clients that prohibit using off-shore workers. "Other nonprime servicing platforms are likely to come to market in the next several months, and we believe that Ocwen can compete effectively for these opportunities, although Ocwen will not necessarily be the winning bidder in all cases," the company said. Write to Jon Prior. Follow him on Twitter @JonAPrior.